Samsung is taking a bold and potentially lucrative strategy with the pricing on its new Galaxy Note 10.1 tablet.
A teardown report from analyst firm IHS found that Samsung will draw a higher margin on its tablets than rival devices such as the Apple iPad. The strategy could generate higher returns for the company at the risk of lowering sales.
According to the IHS estimate, each wireless broadband-equipped Galaxy Note 10.1 carries a hardware and assembly cost of $293 and a retail price of $640. By comparison, a similarly-equipped iPad model costs $316 for Apple to manufacture and carries a $499 retail price tag.
In taking a higher margin, analysts note that Samsung is breaking from the convention which saw rival tablets such as the Kindle Fire sell at a loss for the manufacturer in exchange for a play at higher sales and market share.
"With the Galaxy Note 10.1, Samsung continues to seek the magic formula for a media tablet that can rival the iPad’s market penetration," said IHS senior director of teardown services Andrew Rassweiler.
"And where some other tablets introduced in recent times generated small or no hardware profit, the Galaxy Note 10.1 could turn a decent per unit margin for Samsung, and stands to be a money maker—if the company can extend the recent success of the Samsung Galaxy Note smartphone to its tablet line."
The report comes as Samsung has been fighting to distance itself from Apple on a number of fronts. The two companies are locked in a worldwide legal battle over allegations of copyright infringement. In a US court, jurors are still working to determine whether Samsung's Android devices copy patented components from the iOS platform.
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